Numerous processes and devices exist for facilitating electronic payments. Today, virtually all domestic banking institutions offer customers the ability to conduct a limited number of electronic transactions either from an automated teller machine (ATM) located on-site at the institution, or from a remote ATM serving the institution. The remote services are made possible in part through the development of communications systems that provide for the interconnection of many clearing house or regional, national, or international electronic funds transfer (EFT) networks. These networks are specialized digital packet networks that communicate with various ATM transaction processors and service providers using standard message protocols developed by ANSI and others. A more-or-less standard, generic ATM interface has developed in the banking industry, making it relatively easy for a consumer to use any ATM on any ATM network once he has learned how to interact with this more-or-less standard interface. Of course, ATMs produced by different manufacturers may differ in key placement, number of keys, key legends, screen size, etc. However, there has been a trend toward standardization of these features so as to minimize user discomfort with using a "foreign bank" ATM.
FIG. 1 illustrates a block diagram of an existing prior art system used to process a typical ATM transaction, such as a cash withdrawal or balance inquiry, shown generally at 8. As seen in FIG. 1, the ATM transaction system includes an ATM transaction processor 14, an ATM network access device (such as an ATM terminal) 15, an ATM banking institution 16, a consumer banking institution 18 (where the ATM banking institution 16 and the consumer banking institution 18 can be one and the same), and an automated clearing house (ACH) network 20. ATM network access device 15 is connected to ATM banking institution 16 through a suitable communications path 17. ATM transaction processor 14 is connected with a host computer at ATM banking institution 16 through communications path 19, with a host computer at consumer banking institution 18 through communications path 21, and with ACH network 20 through communications path 23. As is known to those of skill in the art, appropriate information is exchanged between ATM transaction processor 14, ATM banking institution 16, consumer banking institution 18, and ACH network 20 to effect an ATM transaction.
ATM network access device 15 may be physically co-located with the ATM banking institution 16, or may be remotely located with respect thereto. In operation, ATM network access device 15 serves as an interface between a user and the ATM network to receive input from the user and to provide necessary output (and funds, when necessary) to the user. ATM network access device 15 retrieves user information from an ATM card inserted by a user to initiate an ATM transaction, and receives appropriate associated PIN information and transaction information from the user. This information is passed through communication path 17 to the ATM banking institution 16. As necessary, information is then transferred through communications path 19 to ATM transaction processor 14. ATM transaction processor 14 identifies the consumer banking institution 18 from the information retrieved from the user's ATM card, and passes the necessary transaction information entered by the user to the appropriate consumer banking institution 18 through communications path 21.
Consumer banking institution 18 verifies the user's account data and verifies that the user has sufficient funds available for the requested transaction. Consumer banking institution 18 then forwards an authorization message (either a deny transaction request message or a proceed with transaction message, for example) to the ATM transaction processor 14 through communications path 21. ATM transaction processor 14 then forwards the authorization message back to the ATM banking institution 16 through communications path 19. These messages serve to confirm that the transaction is to proceed or be prohibited. Upon receipt of the authorization message, the ATM banking institution 16 forwards the authorization to the ATM network access device 15 using communications path 17. Based on the authorization received, the ATM network access device 15 provides suitable information and funds, if requested, to the user. The user then has the option of terminating the session, or initiating another transaction, which would proceed in a similar fashion.
Once the consumer has terminated the ATM banking session, the ATM transaction processor 14 forwards a confirmation record of the completed transaction to the ATM banking institution 16 using communications path 19, and forwards an identical confirmation record to the consumer's banking institution 18 using communications path 21. ATM transaction processor 14 also forwards a record of the transaction and information to facilitate the appropriate debiting and crediting of the necessary accounts to a designated ACH network 20 through communications path 23. ACH network 20 then operates to debit (where the user has requested a withdrawal of funds, for example) the user's account at the consumer banking institution 18 using communications path 25, and to issue a credit to the ATM banking institution 16 using communications path 27. Finally, ATM transaction processor 14 creates a record of the transaction and writes that record to a back-up data and transactions log 13 for any future reference, if necessary.
Most ATMs, however, do not currently permit customers to pay bills, make debt payments or conduct other complex financial transactions, but instead typically limit the user to withdrawals, account inquiries, account transfers, and, if the ATM the user accesses is that of his own bank, deposits. There are some circumstances where ATMs have been used to conduct transactions, such as bill payment transactions, in addition to those described above. However, in the case of bill payment transactions, the consumer is usually limited to making bill payments only to certain entities specified in advance by the bank, and is required to complete a somewhat onerous registration process for establishing ATM-based bill payment authority or privileges. Other ATM terminals have been modified to accept almost any bill payment from consumers. In such instances, the ATM functions more like a mail box: the consumer initiates a bill payment, keys in the amount to be paid, and places the payment coupon and the payment amount, either as cash or a check, into an envelope and "deposits" the bill payment into the ATM. In both of the scenarios described above, the bank assumes the role of a payment processor, separating and forwarding consumer bill payments by vendor. Neither payment methodology involves an electronic funds transfer, and neither the bank nor the vendor realizes any noticeable improvement in processing efficiency.
While personal banking and home banking initiatives have become more prolific in the past several years, the costs associated with such efforts, both for the bank and the consumer, have proven prohibitive. Service providers incur very high communications costs in linking their central processors with personal computer (PC) users, banks, and payees (merchants). Many payees also do not accept electronic payments (for lack of substantial volume), forcing service providers to make costly paper-based payments. Settlement processing can be costly, as banks must install special purpose software and operating procedures. These and other costs have been passed along to consumers, thereby dampening the demand for home banking services.
These limitations are reflected in U.S. Pat. No. 5,220,501, Lawlor et al. The process for an electronic monetary system as described by Rosen in U.S. Pat. No. 5,453,601 addresses some of the problems associated with certain payees not accepting electronic payments, but the described invention has not yet been widely implemented, if at all. In addition, many banks have developed PC and telephone banking processes merely to allow the consumer to create a paper check at the bank through a PC or telephone. The bank then processes the check in the same manner as consumer-written checks. While the consumer has not had to physically write a check, the bank must remit the paper payment created by the consumer, with little or no operational savings or efficiencies to the bank.
The effort to provide more home banking services has prompted a number of inventions that provide access to accounts through various modifications of pre-existing hardware that dial into payment networks or bank systems for processing transactions. These are described in U.S. Pat. Nos. 5,025,373; 5,591,949; 5,424,938; 5,050,297; 5,336,870. Virtually all of these inventions only increase the accessibility of the existing ATM/banking process without addressing the functionality of accessing and processing loan and other debt payments serviced by non-depositories.
Another similar approach that has met limited success has been the establishment of automatic drafting mechanisms for payment of specific consumer obligations. In this scenario, the consumer provides the vendor with information regarding his bank's automated clearing house (ACH) routing number and his account number. The vendor then drafts the amount owed, usually according to a set schedule, from the consumer's account each month. The process is efficient for the vendor and for the bank, but leaves the consumer with little control as to the timing of the draft and the amount of the draft. It is not until the draft has already occurred that the consumer is aware of the transaction, and thus able to verify the transaction's accuracy. Nor does the consumer receive a record of the transaction until the bank issues a periodic statement of the account. This is the type of invention described by Duval, et al. in U.S. Pat. No. 5,469,991, a pre-authorized billing system.
Finally, point-of-sale (POS) transactions are growing more prevalent, with ATM card readers and key pads appearing in grocery stores, convenience stores and gas stations, among others. While the predominant use of the POS terminals has been to speed the check-out time (increase payment efficiency), POS debit transactions have also provided a substitution for cash and have served to reduce the number of checks returned to the vendor due to insufficient consumer funds balances. During a POS transaction, the consumer swipes the ATM (or debit) card through a card reader. Assuming an on-line debit transaction (versus an off-line credit-oriented transaction), the consumer enters a unique personal identification number (PIN), and then waits for the card reader/register to communicate to the transactions processor the total amount of the sale (i.e., the amount to be debited from the consumer's transaction account). (In U.S. Pat. No. 5,484,988, Delfer describes a similar process that scans a consumer's account information from a physical paper check presented at the point-of-sale.) After receiving verification from the consumer's bank that sufficient funds exist in the consumer's account to cover the transaction and an authorization from the consumer's bank to proceed, the transactions processor forwards to the POS terminal a transaction approval message (or, in the case of insufficient funds, a denial). Funds are routed from the consumer's bank account to the vendor through an ACH network. This scenario provides efficiencies for the vendor, the bank, and the consumer, but unfortunately requires a purchase transaction to initiate the process. Such a requirement is unrealistic for the repayment of a loan or other debt obligation.